Australian dairy processor Burra Foods has signed an agreement with dairy farming company Inner Mongolia Fuyuan Farming, allowing the company to gain a majority shareholding in it.
The move is part of Burra's growth plans to improve market access and raise funds for expansion of its dairy processing facility in Korumburra, Victoria.
However, the deal is subject to approval from Foreign Investment Review Board (FIRB).
Fuyuan is owned by several investors, with China Mengniu Dairy Company (Mengniu) being the largest shareholder. It manufactures and distributes dairy products throughout China.
With Fuyuan's stake in Burra Foods, the local Gippsland dairy processor will be able to gain access to the global dairy market along with increased access to capital tofund its expansion plans..
Burra Foods founder Grant Crothers said: "The new shareholder structure will provide Burra Foods with vastly improved access to new high value milk and nutritional powder markets, facilitating low risk growth up the value chain, and access to additional capital.
"We have always been about maximising value from the milk solids we collect and process and have taken a very cautious approach to China, appreciating the significant risks that come with the increasing opportunities available.
"This injection of capital provides us the scope to meet the ongoing market demand for premium dairy based ingredient products, including nutritional milk powders, and move up the value chain while minimising the risks associated with penetrating volatile international markets with high value products."
Both Burra Foods and Fuyuan will appoint directors for a new board after getting approval from FIRB and completion of the deal.
Crothers will continue in his role as CEO and managing director of Burra Foods and the current management team will continue to work towards fulfilling customer supply agreements.
